The government is believed to have drawn up a contingency plan that would involve the wholesale renationalisation of BT, should the company get into financial difficulty, because of the public purse's exposure to the telecom giant's mammoth pension scheme.

Government advisers believe a wholesale takeover of BT, after 25 years as a quoted company, would be a more efficient use of public funds than supporting a refinancing or third-party buyout, because the government has guaranteed the payouts of 262,000 BT pensioners whose employment started when the company was state-owned.

The controversial crown pensions guarantee will come under the spotlight in May when BT unveils the extent of the deficit in its £33bn final salary pension fund, the largest private sector fund in the UK. At its last triennial valuation in 2006, the fund was £3.4bn in the red. Since then hundreds of billions of pounds have been wiped off the value of investments and the deficit is likely to be many times larger.

BT is expected to have to greatly increase the £280m a year it has been pumping into the pot, draining its cash resources at a time when its corporate IT business, BT Global Services, has failed to deliver on expectations, and its retail operation is squeezed by economic conditions.

Shares in BT plunged last week as it announced an 81% drop in third-quarter profits, amid fears it is becoming cash-constrained and will have to cut its dividend. BT is now valued at £7.6bn, less than a quarter of its pensions liability.

The guarantee was put in place when BT was floated in 1984. In the event of a collapse, it effectively leaves the government responsible for ensuring the pension payouts of everyone who worked for BT when it was state-owned.

Though there is no imminent threat to BT's finances, the speed with which the banking sector collapsed has led the government to draw up 'doomsday' plans to support other privatised companies in critical sectors such as energy and water. But it has decided that supporting a privately owned BT, when the public purse would be open to its pensioners, makes no sense. Instead it would buy BT outright.

BT refused to comment on a bail-out. However, a spokesman pointed out: "As well as covering any outstanding pension liabilities relating to the service of pre-privatisation employees, the government has confirmed to BT its view that the crown guarantee is also capable of extending to pension liabilities relating to the service of such employees since privatisation."

Neither the Department for Business nor the Treasury were able to comment.